More conservative heat on Johnson-Crapo — Summers on Piketty — Abramson out at NYT

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MORE CONSERVATIVE HEAT ON JOHNSON-CRAPO — Senate Banking takes up the Johnson-Crapo GSE reform bill again today but the prospects are not getting any better. Democrats once on the fence have indicated they will oppose the bill. And conservative groups keep coming out against it. From a memo that went out last night to “conservative leaders and groups” from by Ken Blackwell, Brent Bozell, Erick Erickson, Tony Perkins and Colin Hanna: “Unfortunately, the Johnson-Crapo bill, which has been called the ‘Obamacare of Real Estate’ and ‘Fannie and Freddie on steroids’ would do nothing to bring real reform to housing finance and would in fact, make the situation worse.” Full letter: http://bit.ly/1jJXHw4

JAPAN POPS — Bloomberg’s Keiko Ujikane: “Japan’s economy grew at the fastest pace since 2011 in the first quarter as companies stepped up investment and consumers splurged before the first sales-tax rise in 17 years last month. … [GDP] grew an annualized 5.9 percent from the previous quarter … more than a 4.2 percent median forecast … Consumer spending rose at the fastest pace since the quarter before the 1997 tax increase, while capital spending jumped the most since 2011. Today’s data add to signs the economy will have sufficient momentum to bounce back from the 3 percentage point levy rise that is set to trigger a contraction this quarter.” http://bloom.bg/1iVw4iO

LARRY SUMMERS ON PIKETTY — The former Treasury Secretary writes in Democracy Journal: “[The book] exudes erudition from each of its nearly 700 pages, drips with literary references, and goes on to propose easily understood laws of capitalism that suggest that the trend toward greater concentration is inherent in the market system and will persist absent the adoption of radical new tax policies. … [H]is work richly deserves all the attention it is receiving. This is not to say, however, that all of its conclusions will stand up to scholarly criticism … or to the test of history in the long run.

“Nor is it to suggest that his policy recommendations are either realistic or close to complete as a menu for addressing inequality … The rise of incomes of the top 1 percent … reflects the extraordinary levels of compensation in the financial sector. While anyone looking at the substantial resources invested in trading faster by nanoseconds has to worry about the over-financialization of the economy, much of the income earned in finance does reflect some form of pay for performance … ”

This is one that’s hard to pick and choose from. You should really just go read the whole thing: http://bit.ly/1mWvBAV And while your are at it, follow Summers on Twitter: @LHSummers.

PETERSON REWIND — Lots of fascinating stuff at the Peterson Foundation Fiscal Summit yesterday, including former President Bill Clinton’s lengthy riffs on how to boost growth through smart corporate tax reform and repatriation to NJ Gov. Chris Christie dismissing Bridgegate as a drag on his political future and promising fixes to the state’s fiscal crises next week. My convo with Alan Greenspan also produced some interesting moments. …

Greenspan said in addition to the $12.5 trillion in current federal debt, the government also faces massive potential future debt due to large financial (and non-financial) institutions that he says remain TBTF. … Per HuffPo’s Zach Carter: “Greenspan said Wednesday that JPMorgan Chase is too big to fail and that supersized Wall Street banks are clouding the federal government's budget outlook. … Greenspan didn't make a hard pitch on entitlement cuts, focusing instead on the risk of bank bailouts. ‘The safest thing politically to do is always to bail out somebody,’ Greenspan said. ‘This is fundamentally different than it was.’” http://huff.to/1suqntt

SHOT — Former President Clinton strongly defended his decision to sign Gramm-Leach-Bliley repealing Glass-Steagall, saying it would have survived his veto and was not responsible for the financial crisis. He also said he did not sign it as a favor to Wall Street and that he might have done things differently if he’d known it would eventually lead to massive bailouts of TBTF banks.

CHASER — Here’s Rep. John Dingell (D-Mich.) on the House floor warning in 1999 that Gramm-Leach-Bliley would lead to the creation of mammoth TBTF banks: http://bit.ly/1iNJfy4

FIRST LOOK: HOW WOULD SIFI TAG HIT ASSET MANAGERS? — American Action Forum research from Douglas Holtz-Eakin and Satya Thallam out today: “Our research found that this designation would be costly to retirement savers and investors, in some cases retirement savers could see their returns reduced by as much as 25 percent, or over $107,000. Specifically, the research found that: A 25 year old beginning with a modest principal, invested in the highest return fund, could lose out on over $107,000 in earnings over their working life. For a 25 year old invested in the largest fund, they could miss out on over $44,000 in earnings.” Full results: http://bit.ly/1qEAoIH

WORST PLACE TO INVEST? RUSSIA — Per Bloomberg: “In the latest Bloomberg Markets Global Investor's Poll, Russia was voted the worst place to invest among the world’s largest economies … More than seven in 10 of those polled say Russia’s economy is weakening, and 45 percent recommend selling Russian assets in light of the conflict in Ukraine, which has prompted U.S. and EU sanctions. Seventy-five percent say they’re pessimistic about how Vladimir Putin’s policies affect the investment climate.” http://bloom.bg/1juNgY1

TOP STORY: ABRAMSON OUT AT NYT — POLITICO’s John F. Harris and Hadas Gold: “Brilliant journalist rockets to the top of a newsroom, then discovers that the traits that make a great reporter or writer are not the same — indeed, can be sometimes be the very opposite — as the traits that make someone a capable newsroom leader. At first blush, Jill Abramson’s brief tenure as executive editor of the New York Times looks like a striking new example of a familiar phenomenon — the miscast editor … But three factors guarantee that this move will ricochet longer and more intensely than just another job shuffle atop a newspaper struggling to reinvent itself in a new era of media. … First is the uncommonly bloody manner of execution. Abramson had drawn criticism for her sometimes harsh personality, but certainly it was no harsher than the treatment handed her by former patrons. Times officials made no effort to pretend that her departure was anything other than involuntary …

“Second is gender. Abramson’s ascension less than three years ago as the first women to lead the Times was widely hailed as a feminist triumph. And even her struggles in the job have tended to be viewed as a Rorschach test … Third is the larger question about the leadership and long-term vitality of the Times … Abramson is the third top executive in just over a decade who Sulzberger has hired and then fired in high-profile fashion. … If Abramson proved to be the wrong choice, there is not any mystery about who made it.” http://politi.co/1mWJ4c1

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Jon Prior and MJ Lee and the state of GSE reform now and next year [http://politico.pro/1hMGtta]… Zachary Warmbrodt on the spirit of Michael Lewis at a Wall Street conference [http://politico.pro/1jvFahW] … Pro's subscriber-only coverage -- and to get Morning Money every day before 6 a.m. -- please contact Pro Services at (703) 341-4600 or info@politicopro.com.

DRIVING THE DAY — Senate Banking takes up Johnson-Crapo at 10:00 a.m. and should report it out, at which time it will go exactly nowhere … President Obama and the First Lady this morning visit the 9/11 memorial at ground zero in NYC where the president will offer remarks before returning to DC … Empire State Survey at 8:30 a.m. expected to rise to 6.0 from 1.3 … Consumer prices at 8:30 a.m. expected to rise 0.3 percent headline and 0.1 percent core … Industrial production at 9:15 a.m. expected to be flat with capacity use at 79.1 percent … NAHB housing market index at 10:00 a.m. expected to rise to 49 from 47 … Philadelphia Fed survey at 10:00 a.m. expected to dip to 14 from 16.6 … Treasury Secretary Jack Lew offers the commencement address at Georgetown University

SALT GETS POLITICAL — Lot of politics chatter at the SALT hedge fund conference in Vegas today including David M. Rubenstein at 9:00 a.m. James Carville, David Plouffe and Karl “Brain Doctor” Rove at 8:45 a.m. and Valerie Jarrett and Robert Wolf at 9:30 a.m. Full agenda (all times local): http://bit.ly/1jwe5uV

NEW CYBERALLIANCE — Per POLITICO’s Darren Samuelsohn: “The Chertoff Group and Edelman are announcing a cybersecurity partnership later today for their financial services, energy, technology, health care and retail clients. Among a long list of services, the security consulting shop and PR firm will team up to offer physical and cyber risk assessments, scenario planning and exercises, media training and vendor risk management assessments.”

HERITAGE ALSO HITS JOHNSON-CRAPO — Heritage's Senior Research Norbert Michel offered the following: “The housing-finance market just like the rest of the private sector should not require government guarantees. Johnson-Crapo provides explicit taxpayer protection to financial firms — that’s no better than the old system.”

INVESTORS PILE INTO BONDS — WSJ’s Min Zeng: “Global bond rates dropped to their lowest levels of the year … as central bankers signaled their determination to jolt the world's largest economies out of their malaise. Investors piled into U.S., German and British government bonds … driving down their yields. The yield on the 10-year U.S. Treasury dropped to as low as 2.523 percent, its lowest level in more than six months. In Germany, 10-year bund yields fell to their lowest point in a year. …

“The persistently sluggish economies in Europe and the U.S. have confounded central bankers and surprised investors, many of whom anticipated that this year would see relatively strong economic growth after years of monetary stimulus. … The prospect that central banks will continue to inject money into the world's bond markets, as well as enact policies to keep interest rates low, has acted as a green light for the world's bond buyers.” http://on.wsj.com/1oRarRM

ABRAMSON FLY AROUND —

CLASH OVER PAY? — New Yorker’s Ken Auletta: “Several weeks ago, I’m told, Abramson discovered that her pay and her pension benefits as both executive editor and, before that, as managing editor were considerably less than the pay and pension benefits of Bill Keller, the male editor whom she replaced in both jobs. … ‘She confronted the top brass,’ one close associate said … Eileen Murphy, a spokeswoman for the Times, said that Jill Abramson’s total compensation as executive editor ‘was directly comparable to Bill Keller’s’—though it was not actually the same. I was also told by another friend of Abramson’s that the pay gap with Keller was only closed after she complained.

“But, to women at an institution that was once sued by its female employees for discriminatory practices, the question brings up ugly memories. Whether Abramson was right or wrong, both sides were left unhappy. A third associate told me, ‘She found out that a former deputy managing editor’—a man—‘made more money than she did’ while she was managing editor. ‘She had a lawyer make polite inquiries about the pay and pension disparities, which set them off.’” http://nyr.kr/1gpJ2ql

PRESSURE FROM SULZBERGER; SHARES SINK — Bloomberg’s Edmund Lee: “Sulzberger pressured Abramson, 60, to resign, according to two staff members familiar with the matter … Sulzberger and Abramson hadn’t been getting along for at least the past few months, according to the people, who cited a fundamental conflict of personalities. … Sulzberger had never felt fully comfortable with Abramson, despite appointing her the top editor three years ago .. He had reservations about her loyalty, as he had seen her as part of the earlier editorial regime headed by Bill Keller …

“Times Co. shares extended earlier losses today, falling 4.5 percent at the close. The stock, which more than doubled during Abramson’s tenure, is still down 71 percent from a 2002 peak. … The Times continues to grapple with how to adapt to the digital age. … The company reinstated its dividend last year and now has almost $1 billion in cash and equivalents.” http://bloom.bg/1iNPZvC

MANY CLASHES — NYT’s David Carr and Ravi Somaiy — “Ms. Abramson … had been in the job only since September 2011. But people in the company … described serious tension in her relationship with Mr. Sulzberger, who had been hearing concerns from employees that she was polarizing and mercurial. They had disagreements even before she was appointed executive editor, and she had also had clashes with Mr. Baquet. … In recent weeks, people briefed on the situation said, Mr. Baquet had become angered over a decision by Ms. Abramson to try to hire an editor from The Guardian, Janine Gibson, and install her alongside him a co-managing editor position without consulting him. It escalated the conflict between them and rose to the attention of Mr. Sulzberger.

“Ms. Abramson had recently engaged a consultant to help her with her management style. Mr. Sulzberger nevertheless made the decision earlier this month to dismiss her, and last Thursday he informed Mr. Baquet of his promotion … As part of a settlement agreement between her and the paper, neither side would go into detail about her firing. Ms. Abramson did not return messages seeking comment. … Her dismissal, after less than three years in the job, was met with disappointment by some women in the newsroom, and could be perceived as a step backward in the cause of female leadership at The Times and elsewhere in the industry.” http://nyti.ms/1mWCGBz

ALSO FOR YOUR RADAR —

ICYMI: GEITHNER MUST COMPLY WITH SUBPOENA — Bloomberg’s Edvard Pettersson: “Ex-U.S. Treasury Secretary Timothy Geithner must comply with Standard & Poor’s demand that he provide documents related to its claim the U.S. sued the company in retaliation for downgrading government debt. Harold W. McGraw III, chairman of S&P parent McGraw Hill Financial Inc. (MHFI), said in a court statement that Geithner called him days after S&P downgraded the U.S. debt in August 2011 and told him that the company would be held accountable for it. McGraw said Geithner told him there would be a ‘response’ for the downgrade, which the government said was based on an error.” http://bloom.bg/1qEaDs4

OFFICIALS PROPOSE SCORECARDS FOR RISK MODELING FIRMS — Reuters’ Sarah N. Lynch: “U.S. government officials recently proposed creating scorecards to measure the potential threat posed by firms that offer risk models, amid concerns that large financial institutions may be too dependent on the same products … The review marks another area of scrutiny for the Financial Stability Oversight Council, a group of regulators that has already imposed tougher rules for companies including insurers, banks and market utilities such as derivatives clearinghouses. The council is also generally responsible for identifying emerging risks to the larger financial system.” http://reut.rs/1iVrh14

FIRST LOOK: BANKS EXPECT MORE COMMERCIAL LENDING — Per release out today: “April’s jobs figures created fresh optimism about the strength of the economy and, according to a new survey, banks are prepared to support U.S. business expansion. Financial institutions are planning to make more loans to businesses in 2014 than in 2013, according to the new survey by Sageworks, a financial information company. Sageworks surveyed 417 banking and credit union professionals who work closely with their institution’s lending portfolio, and 67 percent of them said their institution would either be making more or significantly more commercial loans this year.” http://bit.ly/1msZ6rj

CITI MOVES TO CLEAN UP MEXICAN OPERATION — WSJ’s Michael Corkery and Elisabeth Malkin: “Citigroup is moving quickly to try to put a costly fraud at its Mexican business behind it, firing an additional 11 employees, including four high-ranking executives in Mexico. On Monday afternoon, the board of the bank was briefed on an internal investigation into the $400 million fraud involving a large Banamex client. Citigroup’s chief executive, Michael L. Corbat, flew to Mexico City the next day and by Tuesday evening, the 11 employees in Mexico were fired … Among those fired were four of the bank’s top executives in Mexico: its head of corporate banking, head institutional risk officer, head of trade finance and head of trade and treasury solutions." http://nyti.ms/1lhrU3k

** A message from the Peter G. Peterson Foundation: The 2014 Fiscal Summit: Our Economic Future took place in Washington, DC on May 14. Program included Keynote Discussion with President Bill Clinton, Founder of the Clinton Foundation, as well as Governor Chris Christie, Senator Rob Portman, House Democratic Leader Nancy Pelosi, and other leading policymakers and economic experts. This year’s Summit explored the connection between a strong fiscal foundation and a growing, thriving economy. To secure our economic future, we can make choices today that lead to greater access to capital, more private investment, improved business and consumer confidence, and the ability to invest in priorities like education, research and development, and infrastructure. Visit www.FiscalSummit.org to watch highlights and learn more. **